Barriers to the Implementation of One-Price Policy on Cement Commodities and Possible Policy Options

Abstract

— This study aims to address barriers that will arise if a single price cement policy is implemented and propose policy to reduce cement prices disparity between regions. Questionnaires and Focus group Discussion (FGD) are the instruments to collect data. These data were analysed using Regulatory Impact Assesment (RIA). The study found that the cement price disparity only occurs in some remote and border areas where logistics facilities are left far behind. Also, it was found that one price cement policy would be difficult to be implemented. The reasons were due to six barriers: (i) logistical costs from factories to consumers; (ii) differences in the policies for regulating freight transport that vary between regions; (iii) production centers in Java while consumption spread throughout Indonesia; (iv) ownership status of private cement factories; (v) limited of frequency transportation and variation of transportation modes; (vi) consumers' perceptions of cement brands vary in each region. However, from the perspective of CBA of RIA approach, there are only two policies that need to be considered seriously: regional targeted subsidy and ceiling regional retail price policies. This study recommends that regional targeted subsidy can be implemented to target region example Papua as the best option policy.